Competitive analysis has long been an integral part of any solid framework for strategic planning. It’s a technique that’s used to monitor the industry and maintain a competitive edge. But how can competitive analysis be used for benchmarking?
Let’s look at things from a different perspective. Is it possible to use your competitive edge for improved benchmarking? Yes. And not only can using competitor analysis for benchmarking provide you with a comprehensive overview of your company status, it can also ensure you’re making informed decisions to retain a strong position in an increasingly competitive landscape.
Introducing Competitive Benchmarking
Many companies use both competitive analysis and benchmarking techniques separately in a bid to create the best performing and most successful brand they can. But by combining them, it becomes easier to identify the processes, strategies, and methods that really attract and engage customers, helping you to tailor your own approach to ensure you’re always ready and prepared to take the market share.
But what exactly is the difference between competitive analysis and benchmarking?
Competitive analysis is designed to provide an overview of the approaches that are being taken by your competitors. It can highlight the particular strengths and weakness of others operating in your industry or in complementary sectors to show you what sort of campaigns and strategies are working, and which are failing to achieve their goals.
Benchmarking focuses on identifying the ‘best in class’. It’s a way for businesses to envision their ideal processes and ideal outcomes, and take appropriate measures to bridge the gap between where they are now, and where they want to be in the future. Benchmarking can help businesses to make internal improvements to meet their goals.
Competitive benchmarking combines the two. It’s a way of measuring your company’s performance against the performance of your competitors using a set of relevant metrics. It makes benchmarking relevant to the wider industry. Ultimately, competitive benchmarking makes both competitive analysis and benchmarking actionable.
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How to Use Competitive Analysis for Benchmarking
To bring competitive analysis into your benchmarking strategy, you’ll need to consider the prerequisites for both techniques. From a competitive analysis perspective, this means carefully selecting the right competitors to compare your brand with. And from a benchmarking perspective, it means identifying relevant key performance indicators.
With competitive benchmarking, there are three competitor groups that can be beneficial to measure your performance against. The first is your closest, most direct competitors. By setting your benchmarks based on the strengths and weaknesses of businesses of a similar size and experience, you can make effective decisions for the near-to-mid term future of your organisation and identify immediate opportunities.
The second group is made up of the biggest players in your industry. While competitive analysis against these household names may seem unsettling, it can help you to better understand where you want to be, and how you want to get there. It can identify any common approaches taken by yourself and these highly successful companies, as well as highlighting areas where you may be weaker and facilitating improvements.
The third group comprises of the smaller companies who you may not feel are true competitors just yet. But as many organisations have found, the little guy can emerge quickly if they’re doing things right. By analysing the behaviours of the market’s newest entrants, you can benchmark appropriately to avoid having them catch you up.
Competitive benchmarking not only requires identification of competitors; it also requires the identification of suitable metrics. And the truth is that there’s no right or wrong here. The beauty of using competitive analysis for benchmarking is that it’s a flexible approach that fits around your own business needs. It enables you to select the metrics that matter to you, and choose those that can generate the biggest outcomes.
Possible metrics to consider include:
- Share of voice
- Audience sentiment
- Social reach and engagement
- SERPs visibility and awareness
- Web traffic
- Marketing objectives and strategies
To undertake competitive benchmarking, you’ll need to ensure you have the data you need from your competitors. And some data can be easier to obtain than others. While aspects such as SEO data and social media metrics can be simple to find, financial data and other internal data can be challenging to locate. That’s why competitive analysis for benchmarking often cannot be undertaken exclusively by the business itself.
To ensure businesses have the information they need to successfully conduct competitive benchmarking and generate clear and actionable insight, it’s often recommended that they work alongside experts in data collection and analysis. These organizations use complex techniques such as social listening and data crawling to generate a comprehensive dataset that can be used to determine the status and market position of others, compare performance, and create a plan of action.
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